Non-Tax Revenue Assumptions

In order to fund its programs and services, the Commonwealth collects a variety of taxes and receives revenues from other non-tax sources, including the federal government, and various fees, fines, court revenues, assessments, reimbursements, interest earnings and transfers from its non-budgeted funds. These revenues are deposited in the General Fund, the Highway Fund and other operating budgeted funds. The Governor's fiscal 2010 budget recommendation assumes that approximately 62% of the Commonwealth's budgeted operating revenues and other financing sources were derived from state taxes. In addition, the federal government provided approximately 27% of such revenues, with the remaining 11% provided from departmental revenues and transfers from non-budgeted funds.

House 1 Total Revenues: $27.521 Billion
($s in million)

Federal Revenues

Federal revenues are collected through reimbursements for the federal share of entitlement programs such as Medicaid and through block grants for programs such as Temporary Assistance for Needy Families (TANF). The amount of federal reimbursements to be received is determined by state expenditures for these programs. The Commonwealth receives reimbursement for approximately 50% of its spending for Medicaid programs. Generally, block grant funding is received quarterly and is contingent upon maintenance-of-effort spending levels determined by the federal government. Staff from the Executive Office for Administration and Finance work with agencies to project budget year spending levels for these federally supported programs.

Departmental Revenues

Departmental revenues are derived from licenses, tuition, fees, reimbursements and assessments for services including, but not limited to, revenues from the Registry of Motor Vehicles, reimbursement of healthcare costs from municipalities participating in the state's Group Insurance Commission (GIC) health care programs, drug rebate money received by the Executive Office of Health and Human Services, interest earnings received on the state's budgeted fund balances and fees collected by the Secretary of State's Office. MGL Chapter 7:3B provides for an annual review of fees to confirm that they are sufficient to defray the cost of providing the service. As part of this exercise, A&F analyzes historical non-tax revenue receipts and works with agencies to develop budget-year projections for these revenues. During the budget process, agencies are asked to review and whether fees and charges:

cover the full cost of providing a service;

have been updated recently; and

are comparable to what other states charge for similar services.

House 1 includes two sections that give a detailed view of projected non-tax revenue for fiscal year 2010. Section 1B details projected fiscal year 2010 non-tax revenue receipts by the department, board, commission or institution that administers and collects the respective revenue source. The online version of House 1 allows the user to further drill down into each governmental area and view a title and description of each revenue source contributing to that area's total non-tax revenue. Additionally, the fund statements which are included in the "Financial Statements" section of the budget document offer another view of departmental revenues by operating fund.

Consolidated Transfers

Consolidated transfers include a number of operating transfers to and from non-budgeted funds of the Commonwealth. These include transfers to support spending to implement the Commonwealth's Health Care Reform law through including the Commonwealth Care Trust Fund and the Medical Assistance Trust Fund. These inflows and outflows also include annual tobacco settlement proceeds received as part of the Master Settlement Agreement with tobacco companies, net revenues from the State Lottery Fund, fringe revenue to recoup the cost of various statewide benefits assessed on non-budgeted funds and revenues from the Commonwealth's Abandoned Property Division. The Executive Office for Administration and Finance solicits agency feedback and uses historical data to project transfers to and from the budgeted funds for the proposed budget year.

Section 1C details the budgetary impact of these sources and uses of funds.